Core positioning for 2025 – and preparing for surprises
Three convictions for the year: Favour cash-rich companies and financials, profit from increased M&A activity, and benefit from private equity’s revival
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AS 2025 begins, the world is on the cusp of a new era. The US economy is in a healthy position, supported by cyclical and structural tailwinds and a Federal Reserve in easing mode.
Although we expect a slowdown in the US, our base case is for growth to remain solid – a recession appears unlikely. Europe and China, by contrast, face headwinds with their manufacturing and domestic economic woes, compounded in Europe’s case by political uncertainty.
An “America first” policy in the US – with President Donald Trump’s plans for bumper tariffs, tax cuts, deregulation, government efficiency and the “largest deportation” in the country’s history – could exacerbate the divergence. This may boost US growth at least in the short term, while trade tariffs hit Europe and China.
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